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Start Saving for College on 529 College Savings Day

What better day to start a 529 college savings account than on 5/29?

Have you started a 529 College Savings Plan for your child yet? If not, today, May 29, is the perfect day to get one going.

Today marks “529 College Savings Day,” and the event organizers, College Savings Plans of Maryland, hope to dispel some of the common myths associated with saving for college and encourage those with children in their lives to open up an account. 

According to Joan Marshall, executive director of the College Savings Plans of Maryland, 529 plans are convenient and a tax-advantage for parents of all income levels. And it's not only parents who can start a 529 plan. Grandparents, friends, and other family members can open and contribute to accounts as well.

“The most frustrating myth I hear is: ‘I’ll never be able to save enough,’” said Marshall in a press release. “Putting away even small sums of money can really pay off over time when families make a plan and stick to it.

As part of 529 College Savings Day, the College Savings Plan has provided the following ten fictions and facts about 529 savings plans: 

Fiction:  A Maryland 529 plan can only be used at colleges in Maryland.
Fact: You can use the assets at any “eligible educational institution” around the country and even at some colleges outside of the U.S. That includes 2- and 4-year colleges, graduate schools (including law and medical), and vocational/technical schools.

Fiction:  You can only use 529 plans to pay for tuition.
Fact:  You can use your account assets for many higher education expenses, including tuition, fees, books, and certain room and board costs. The Maryland Prepaid College Trust is designed to be used towards tuition and mandatory fees; however, in the event of a scholarship, funds can be applied to other qualified expenses.

Fiction:  It costs a lot to open and maintain an account.
Fact:  You can start the Maryland College Investment Plan with as little $25 a month with automatic monthly contributions from your bank account.  With the Maryland Prepaid College Trust you can start with an affordable community college plan.

Fiction: You have to make a lot of investment decisions.
Fact:  Whether you prefer a one-step or a do-it-yourself strategy, the Maryland College Investment Plan offers a variety of investment options.  The one-step strategy is a simple age-based option designed to become more conservative as the beneficiary gets closer to college age. The do-it-yourself strategy offers a range of individual portfolios that allow you to create your own investment mix. Also, the Prepaid College Trust allows families to lock in tuition at today’s prices and can be used with or without an account in the College Investment Plan.

Fiction:  It’s too late to start a 529 plan.
Fact:  It’s never too late. Even if your student is in high school or you are planning to enroll in classes soon, you can still take advantage of the tax benefits of a 529 plan. In addition, the more you manage to save now, the less you may have to borrow later.

Fiction:  I make too much money for a 529 plan account.
Fact:  There are no income limitations for a 529 plan. In fact, as part of the tax advantages offered by a 529 plan, account owners can contribute up to $13,000 ($26,000 if married, filing jointly) in a single year without incurring a gift tax.

Fiction:  A 529 plan is only for kids.
Fact:  Are you considering career retraining or an advanced degree? There’s no maximum age for a 529 plan. In fact, a 529 savings plan can be used by adults saving for their own higher education expenses to finish a degree or complete an advanced degree - even if you do not attend full time.

Fiction:  If the child doesn’t go to college, you lose your money.
Fact: Unlike other college savings options, a 529 plan account holder controls the account. That means you can change your beneficiary to another eligible “member of the family” (as per plan rules) with no tax penalty.

Fiction: Only a parent can be an account holder.
Fact:  Parents, grandparents, aunts, uncles, friends…almost anyone can be an account holder. You can also open an account for your own education.

Fiction: If I save now, my child won’t be eligible to receive as much financial aid.
Fact:  The Deficit Reduction Act of 2005 specifies that funds saved in 529 plans are generally considered to be parental assets, which means that only about 6 percent of these assets are currently counted towards the family’s expected contribution in federal need-based financial aid calculations.

Click here for more information about starting a 529 savings plan today. 


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